Iron ore futures came under pressure on Friday and suffered a correction, ending a week of bullish gains.
The most-traded iron ore for September delivery on China’s Dalian Commodity Exchange dropped by 1.05% or RMB 9.50 day-on-day to RMB 896 per tonne on Friday.
As such, the Shanghai Futures Exchange also dropped slightly by 0.60% or RMB 23 day-on-day to RMB 3,832 per tonne.
Iron ore prices at one-year high
Despite the slight slip-up in the paper marker, the buying interest for spot iron ore remained robust due supply tightness of medium grade ores in dockside stocks.
Thus, the high steel consumption then led to buyers to seek for seaborne cargoes rather than wait for further price corrections, which pushed iron ore prices to almost on-year high at $121/mt price range.
As many larger mills continued to depend on medium grade ores as they lacked the flexibility to switch to more cost efficiency blast furnace mix of using high grade ores blending with low grade ores.
China’s iron ore imports reach record in July
China had imported a record-high 112.65 million tonnes of iron ore in July, up 10.8% month-on-month, and up 24% on yearly basis, according to the General Administration of Customs.
Over the Jan-Jul period, the import volume reached 659.6 million tonnes of iron ore, up 11.8% year-on-year, as construction activities recovered gradually in the country from the coronavirus pandemic.
The high iron ore import volumes was in line with high average capacity utilization rates of blast furnaces in China, which reached an average of 86% in July, but slightly lower than June level of 86.4%.